UAE President Mohamed bin Zayed visits Pakistan as its economy crumbles

UAE President Sheikh Mohammed bin Zayed arrived in crisis-hit Pakistan on Tuesday to meet Prime Minister Rahim Shebaz Sharif on a two-day visit as the country plunges into economic chaos.

The Emirati President was received by Pakistan Prime Minister Shehbaz Sharif and several ministers and senior officials. The visit comes two weeks after Sharif visited Abu Dhabi earlier this month in an effort to seek the UAE’s help in navigating Islamabad’s economic and energy crisis.

Pakistan’s economy is said to be close to collapse, with inflation soaring, catastrophic floods estimated to have caused economic losses of more than $30 billion, according to the World Bank, and depleted energy import reserves that have led to regular nationwide blackouts. On Monday, a nationwide power outage left nearly 220 million people without power in Pakistan.

Foreign exchange reserves fell to $4.3 billion in January, enough for three weeks of imports, according to the country’s central bank.

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The UAE agreed to give Pakistan a $1 billion loan on top of an earlier $2 billion loan freeze during Sharif’s visit to Abu Dhabi earlier this month.

Pakistan is also facing energy crisis. Earlier this month Pakistani authorities ordered all markets, restaurants and shopping malls to close early, as part of an emergency plan to conserve energy, as the country struggles to pay extra for energy imports, the Washington Post reported.

Ahead of the president’s visit to Pakistan, its ambassador to the UAE, Faisal Niaz Tirmizi, told the emirate’s state media that the UAE is his country’s largest trading partner and bilateral trade between the two countries is expected to double this year to $10.6 billion in 2021-2022. billion

With a weak economy and exchange reserves barely able to cover a month’s worth of imports, Pakistan remains a key asset for the UAE, according to Reuters.

Emily Hawthorne, senior Middle East analyst at the Texas-based Risk Assistance Network and Exchange, said the UAE is very realistic about maintaining its relationship with Pakistan.

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“Pakistan is an important partner in a large economy and from the source of labor capital that operates companies in the UAE to the blue-collar labor that makes the economy work,” he told Al-Monitor.

According to the Emirates News Agency, about 1.6 million Pakistanis live in the UAE’s population of 9.3 million (as of 2021), accounting for more than 15% of the population that sent remittances of $6.11 billion as of 2020-2021.

“To sustain their economy, the UAE needs to secure a steady supply of labour, capital, talent and energy exports, and Pakistan is one of the key destinations from which they come,” he added.

According to a 2021 report by the Trade Development Authority of Pakistan, Pakistan imports 56% of its crude oil mainly from the United Arab Emirates, 34% from Saudi Arabia and 4% from Kuwait.

The UAE will likely address its aid to Pakistan as a controlled investment during these talks, Hawthorne said, despite Saudi Arabia not announcing this at the World Economic Forum in Davos last week.

It is following a cash-strapped regional shift that has gone down in months but it fosters sustainable growth to reshape the cash-strapped country’s economy.

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“They’re at a point where there’s probably a lot of concern among Gulf capitals like Abu Dhabi and Riyadh about whether the billions of dollars in aid and loans they’re giving to Pakistan are actually going to help. ,” she said.

According to Reuters, the International Monetary Fund and Pakistan have signed a $6 billion bailout in 2019 and added another $1 billion this year on the condition of meeting budget targets and introducing reforms.

Although no investment or trade deals have emerged since the first day of the president’s visit on Tuesday, the UAE’s meetings with Pakistan’s ambassador earlier this month hinted at promising results on several fronts, including clean energy.

Ambassador Tirmizi said, “Pakistan will work closely with the UAE, and you will soon see the results of the talks that have started between these two countries.”

He identified fintech, information technology and small business sectors as key areas of upcoming collaboration.


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